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Petra Diamonds Reports Production +1%, Zero Revenue in 1Q

Oct 28, 2015 5:31 AM   By Rapaport News
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RAPAPORT... Petra Diamond reported that production rose 1 percent year on year to 842,796 carats during its first fiscal quarter ending September 30, towards its goal of more than 3.3 million carats in fiscal 2016. The company had no revenue during the period, noting that the diamond market continues to face significant challenges.

“The diamond market continues to be impacted by excess polished inventory in the pipeline, a slowdown in demand, particularly from China, as well as financing and profitability issues in the midstream,” Petra explained in a trading update.

Petra didn’t hold any tender sales during the quarter compared to of $100.8 million in the same period last year. Consequently, its diamond inventory rose 90 percent to 1.18 million carats at September 30.

The company held its first tender of the year in October, selling 696,801 carats for $68.9 million with 96 percent of the goods on offer sold. The average price achieved of $99 per carat was 8.8 percent below the average price garnered at its previous sales in May and June.

Significant Trends


The company noted some significant trends at its October sale, reporting that prices for 2-carat to 5-carat gem-quality rough was fairly stable. Prices of 0.75-carat to 1.50-carat and for 5-carat to 10-carat rough stones were significantly softer, decreasing by 12 percent to 15 percent from May/June. The company added that prices in the second and third tier quality goods remained fairly stable, while prices in the lowest quality assortments were weak.

Prices were effected by a lower value product mix at the Finsch, Koffiefontein and Kimberley underground mines. Still, Petra maintained its full-year price guidance as it expects a better product mix in the second half, from January through June. Expansion programs at its flagship Finsch and Cullinan mines remain on track and in line with expectations, the company reported.

"Petra's focus remains on the maintenance of a healthy balance sheet, the tight control of costs, and the successful roll-out of our expansion plans, which will deliver the first significant input from the higher quality production areas from H2 FY 2016 onwards,” said Johan Dippenaar, Petra’s chief executive officer. “These measures will assist the Company to withstand uncertain market conditions."
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